Mumbai: The Reserve Bank of India (RBI) on Tuesday relaxed guidelines for Indian companies to raise money overseas through external commercial borrowings (ECB). The RBI allowed companies to raise more funds through ECBs to repay rupee loans or for new capital expenditure in rupees.
It raised the maximum limit of ECB to 75% of the average foreign exchange earnings in the past three fiscal years, or 50% of the highest export earnings in any of the three years, or whichever is higher.
Earlier, a company could raise a maximum of 50% of its average export earnings in the past three fiscal years.
The RBI will also allow refinancing of bridge finance, or short-term credit taken by companies in the infrastructure sector for importing capital goods, with an ECB under the automatic route. Earlier, companies had to seek approval from the RBI for replacing the bridge finance with a long-term ECB.
The central bank said companies in the infrastructure sector can seek trade credit for up to a maximum period of five years for importing capital goods, up from one-to-three years previously. Trade credit is a short-term loan. reuters
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